As the Asian Pacific session begins, the NZD/JPY starts on the wrong foot down some 0.01%, trading at 77.09 during the day at the time of writing. Factors like newly imposed COVID-19 restrictions across Europe, with the UK adding its name to the list, and Omicron variant’s spread, dented market sentiment, thus favoring safe-haven currencies like the JPY. 

On Wednesday, the NZD/JPY pair remained subdued throughout the Asian and the early European sessions, within the 76.70-77.20 range. However, as American traders got to their desks, the risk-sensitive New Zealand dollar rallied from 76.65 to 77.55.

On Thursday, the NZD/JPY pair remained subdued within the 77.30-50 range, around the seven-month-old trendline. However, the pair dropped to the daily low at 76.88 amid a risk-off market mood as the European session began. 

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

The NZD/JPY has an upward bias, though it faces strong resistance at a seven-month-old downslope trendline around 77.30-50, which would be a problematic resistance area to overcome. Despite the abovementioned, the “spark” for NZD bulls to break to the upside could be that the 50-hour simple moving average (SMA) is about to cross over the 200-hour SMA, forming a golden-cross, which in this case, would propel the New Zealand dollar upwards.

In that outcome, the NZD/JPY first resistance area would be the R1 daily pivot level at 77.70. A breach of the latter could send the pair towards the 200-day SMA, at 78.07, immediately followed by the 100-day SMA at 78.26.

On the other hand, failure to break the trendline would exert downward pressure on the NZD/JPY pair. The first support would be the central daily pivot at 77.20, followed by the confluence of the 50 and the 200-hour SMA’s around 77.00, which could be challenging support to break. Nevertheless, a break of the latter would expose the S1 daily pivot at 76.85.

NZDJPY Maintains Hawkish Momentum Above 78.0

Dec 10 2021

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